0001421517false00014215172024-07-312024-07-31



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 31, 2024
erilogoh4c.jpg
Energy Recovery, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware001-34112
01-0616867
(State or Other Jurisdiction of Incorporation)(Commission File Number)
(I.R.S. Employer Identification No.)

1717 Doolittle Dr., San Leandro, CA 94577
(Address of Principal Executive Offices) (Zip Code)

510-483-7370
(Registrant’s telephone number, including area code)

Not applicable
(Former Name or Former Address, if Changed Since Last Report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par value per shareERIIThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨




Item 2.02    Results of Operations and Financial Condition

On July 31, 2024, Energy Recovery, Inc. (the “Company”) issued an earnings press release announcing its financial results for the second quarter and six months ended June 30, 2024. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety.

The information in this report (including Exhibit 99.1) is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01    Financial Statements and Exhibits

(d)    Exhibits
Exhibit Number
Description
Press release of Energy Recovery, Inc., dated July 31, 2024, to report its financial results for the second quarter and six months ended June 30, 2024.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Date:    July 31, 2024
Energy Recovery, Inc.
By:/s/ William Yeung
William Yeung
Chief Legal Officer



Exhibit 99.1
erilogoh4ca.jpg

Energy Recovery Reports its Second Quarter 2024 Financial Results

SAN LEANDRO, Calif. - July 31, 2024 – Energy Recovery, Inc. (Nasdaq:ERII) (“Energy Recovery” or the “Company”) today announced its financial results for the second quarter and six months ended June 30, 2024.

Second Quarter Highlights
•Revenue of $27.2 million, exceeding the upper end of our guidance of $20 - $25 million.
•Gross margin of 64.6%, a decrease of 80 bps, as compared to Q2’2023, due primarily to higher manufacturing costs.
•Operating expenses of $19.6 million, an increase of 21.4%, as compared to Q2’2023, due primarily to the enhancement of our corporate growth strategy, increased investments within sales and marketing, and executive transition costs.
•Loss from operations of $2.0 million, mainly due to lower gross margin and higher operating expenses.
•Net loss of $0.6 million and adjusted EBITDA of $5.2 million.
•Cash and investments of $138.0 million, which include cash, cash equivalents, and short- and long-term investments.


David Moon, President and CEO, commented on the financial results: “Operationally, the second quarter played out as we expected and second quarter revenue of $27 million exceeded the top-end of our guidance of $20–$25 million. As we have stated since the beginning of the year, this year’s revenue cadence is heavily weighted to the third and fourth quarters, and we reaffirm our full-year revenue guidance of $140–$150 million.”

Mr. Moon added, “In our CO2 business, we commissioned nine second-generation PX G1300 deployments at both existing and new customer sites with a tenth site to be commissioned by the end of August. We believe the summer runtime data we are collecting now, and will be collecting over the next few months, is crucial to the commercial adoption of the PX G1300.”

Mr. Moon continued, “On the corporate side, my team and I have made excellent progress on the strategic work undertaken earlier this year and have completed the Where to Play phase and we are now in the How to Play phase. I look forward to presenting the strategy and roadmap for using our PX technology to drive growth and to create real value for our shareholders.”



Financial Highlights
Quarter-to-DateYear to Date
Q2’2024
Q2’2023
vs. Q2’2023202420232024 vs. 2023
(In millions, except net loss per share, percentages and basis points)
Revenue$27.2$20.7up 31%$39.3$34.1up 15%
Gross margin64.6%65.4%down 80 bps62.9%63.6%down 70 bps
Operating margin(7.4%)(12.5%)up 510 bps(33.0%)(31.3%)down 170 bps
Net loss($0.6)($1.7)up 61%($8.9)($8.0)down 12%
Net loss per share($0.01)($0.03)up 67%($0.16)($0.14)down 14%
Effective tax rate10.5%15.2%
Cash provided by (used for) operations$8.1($4.1)$14.6$4.5


Non-GAAP Financial Highlights (1)
Quarter-to-DateYear to Date
Q2’2024
Q2’2023
vs. Q2’2023202420232024 vs. 2023
(In millions, except adjusted net income (loss) per share, percentages and basis points)
Adjusted operating margin15.3%(4.2%)NM(7.7%)(19.6%)NM
Adjusted net income (loss)$5.1($0.1)NM$0.5($4.6)up 111%
Adjusted net income (loss) per share$0.09$0.00NM$0.01($0.08)up 113%
Adjusted EBITDA$5.2$0.2($1.0)($4.7)
Free cash flow$7.9($4.7)$13.5$3.7
(1)Refer to the sections “Use of Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” for definitions of our non-GAAP financial measures and reconciliations of GAAP to non-GAAP amounts, respectively.
NM    Not Material

Forward-Looking Statements
Certain matters discussed in this press release and on the conference call are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including expectations regarding revenue guidance for the year, the timing of potential new CO2 deployments, our belief that the summer runtime data is crucial to the commercial adoption of the PX G1300 . These forward-looking statements are based on information currently available to the Company and on management’s beliefs, assumptions, estimates, or projections and are not guarantees of future events or results. Potential risks and uncertainties include risks relating to the future demand for the Company’s products, risks relating to performance by our customers and third-party partners, risks relating to the timing of revenue, and any other factors that may have been discussed herein regarding the risks and uncertainties of the Company’s business, and the risks discussed under “Risk Factors” in the Company’s Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) for the year ended December 31, 2023, as well as other reports filed by the Company with the SEC from time to time. Because such forward-looking statements involve risks and uncertainties, the Company’s actual results may differ materially from the predictions in these forward-looking statements. All forward-looking statements are made as of today, and the Company assumes no obligation to update such statements.



Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures, including adjusted operating margin, adjusted net income (loss), adjusted net income (loss) per share, adjusted EBITDA and free cash flow. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions, and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons. The Company believes these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

Notes to the Financial Results
•Adjusted operating margin is a non-GAAP financial measure that the Company defines as loss from operations which excludes i) share-based compensation; and ii) executive transition costs, such as executive search costs, retention costs, one-time severance costs and one-time corporate growth strategy costs, divided by revenues.
•Adjusted net income (loss) is a non-GAAP financial measure that the Company defines as net income which excludes i) share-based compensation; ii) executive transition costs; and iii) the applicable tax effect of the excluded items including the share-based compensation discrete tax item.
•Adjusted net income (loss) per share is a non-GAAP financial measure that the Company defines as net loss, which excludes i) share-based compensation; ii) executive transition costs and iii) the applicable tax effect of the excluded items including the share-based compensation discrete tax item, divided by basic shares outstanding.
•Adjusted EBITDA is a non-GAAP financial measure that the Company defines as net loss which excludes i) depreciation and amortization; ii) share-based compensation; iii) executive transition costs; iv) other income, net, such as interest income and other non-operating expense, net; and v) provision for (benefit from) income taxes.
•Free cash flow is a non-GAAP financial measure that the Company defines as net cash provided by (used in) operating activities less capital expenditures.


Conference Call to Discuss Financial Results
LIVE CONFERENCE CALL:
Wednesday, July 31, 2024, 2:00 PM PT / 5:00 PM ET
Listen-only, US / Canada Toll-Free: +1 (877) 709-8150
Listen-only, Local / International Toll: +1 (201) 689-8354

CONFERENCE CALL REPLAY:
Available approximately three hours after conclusion of the live call.
Expiration: Friday, August 30, 2024
US / Canada Toll-Free: +1 (877) 660-6853
Local / International Toll: +1 (201) 612-7415
Access code: 13747957

Investors may also access the live call and the replay over the internet on the “Events” page of the Company’s website located at https://ir.energyrecovery.com/news-events/ir-calendar.




Disclosure Information
Energy Recovery uses the investor relations section on its website as means of complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor Energy Recovery’s investor relations website in addition to following Energy Recovery’s press releases, SEC filings, and public conference calls and webcasts.


About Energy Recovery
Energy Recovery (Nasdaq: ERII) is a trusted global leader in energy efficiency technology. Building on the Company’s pressure exchanger technology platform, the Company designs and manufactures reliable, high-performance solutions that generate cost savings and increase energy efficiency across several industries. With a strong foundation in the desalination industry, the Company has delivered transformative solutions that optimize operations and deliver positive environmental impact to its customers worldwide for more than 30 years. Headquartered in the San Francisco Bay Area, the Company has manufacturing and research and development facilities across California and Texas with sales and on-site technical support available globally. To learn more, visit https://energyrecovery.com/.


Contact
Investor Relations
ir@energyrecovery.com
+1 (346) 382-6927



ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30,
2024		December 31,
2023
(In thousands)
ASSETS
Cash, cash equivalents and investments$138,027 $122,375 
Accounts receivable and contract assets21,198 47,529 
Inventories, net33,659 26,149 
Prepaid expenses and other assets3,690 3,251 
Property, equipment and operating leases27,847 30,168 
Goodwill12,790 12,790 
Deferred tax assets and other assets11,832 10,712 
TOTAL ASSETS$249,043 $252,974 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Accounts payable and accrued expenses$14,906 $18,583 
Contract liabilities and other liabilities, non-current3,300 1,304 
Lease liabilities12,324 13,279 
Total liabilities30,530 33,166 
Stockholders’ equity218,513 219,808 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$249,043 $252,974 




ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
 (In thousands, except per share data)
Revenue$27,199 $20,723 $39,289 $34,124 
Cost of revenue9,633 7,180 14,588 12,426 
Gross profit17,566 13,543 24,701 21,698 
Operating expenses
General and administrative9,532 7,269 17,098 14,335 
Sales and marketing6,104 5,092 12,256 9,986 
Research and development3,944 3,768 8,295 8,074 
Total operating expenses19,580 16,129 37,649 32,395 
Loss from operations(2,014)(2,586)(12,948)(10,697)
Other income, net1,614 656 3,003 1,312 
Loss before income taxes(400)(1,930)(9,945)(9,385)
Provision for (benefit from) income taxes242 (265)(1,043)(1,424)
Net loss$(642)$(1,665)$(8,902)$(7,961)
Net loss per share
Basic$ (0.01)$ (0.03)$ (0.16)$ (0.14)
Diluted$ (0.01)$ (0.03)$ (0.16)$ (0.14)
Number of shares used in per share calculations
Basic57,366 56,363 57,234 56,296 
Diluted57,366 56,363 57,234 56,296 




ENERGY RECOVERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
20242023
(In thousands)
Cash flows from operating activities:
Net loss$(8,902)$(7,961)
Non-cash adjustments7,586 5,204 
Net cash provided by (used in) operating assets and liabilities15,886 7,280 
Net cash provided by operating activities14,570 4,523 
Cash flows from investing activities:
Net investment in marketable securities(42,895)(16,269)
Capital expenditures(1,025)(849)
Proceeds from sales of fixed assets90 82 
Net cash used in investing activities(43,830)(17,036)
Cash flows from financing activities:
Net proceeds from issuance of common stock1,502 379 
Net cash provided by financing activities1,502 379 
Effect of exchange rate differences(24)41 
Net change in cash, cash equivalents and restricted cash$(27,782)$(12,093)
Cash, cash equivalents and restricted cash, end of period$40,443 $44,365 



ENERGY RECOVERY, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(Unaudited)

Channel Revenue
Three Months Ended June 30,Six Months Ended June 30,
20242023vs. 202320242023vs. 2023
(In thousands, except percentages)
Megaproject$15,815$12,211up 30%$19,915$15,454up 29%
Original equipment manufacturer6,9454,702up 48%10,29111,538down 11%
Aftermarket4,4393,810up 17%9,0837,132up 27%
Total revenue$27,199$20,723up 31%$39,289$34,124up 15%
Segment Activity
Three Months Ended June 30,
20242023
WaterEmerging TechnologiesCorporateTotalWaterEmerging TechnologiesCorporateTotal
(In thousands)
Revenue$26,918 $281 $— $27,199 $20,514 $209 $— $20,723 
Cost of revenue9,345 288 — 9,633 6,921 259 — 7,180 
Gross profit (loss)17,573 (7)— 17,566 13,593 (50)— 13,543 
Operating expenses
General and administrative1,912 984 6,636 9,532 1,860 947 4,462 7,269 
Sales and marketing3,837 1,700 567 6,104 3,120 1,441 531 5,092 
Research and development1,073 2,871 — 3,944 843 2,925 — 3,768 
Total operating expenses6,822 5,555 7,203 19,580 5,823 5,313 4,993 16,129 
Operating income (loss)$10,751 $(5,562)$(7,203)$(2,014)$7,770 $(5,363)$(4,993)$(2,586)

Six Months Ended June 30,
20242023
WaterEmerging TechnologiesCorporateTotalWaterEmerging TechnologiesCorporateTotal
(In thousands)
Revenue$39,007 $282 $— $39,289 $33,810 $314 $— $34,124 
Cost of revenue14,299 289 — 14,588 12,022 404 — 12,426 
Gross profit (loss)24,708 (7)— 24,701 21,788 (90)— 21,698 
Operating expenses
General and administrative3,834 2,002 11,262 17,098 3,798 1,915 8,622 14,335 
Sales and marketing7,582 3,507 1,167 12,256 6,295 2,611 1,080 9,986 
Research and development2,173 6,122 — 8,295 2,023 6,051 — 8,074 
Total operating expenses13,589 11,631 12,429 37,649 12,116 10,577 9,702 32,395 
Operating income (loss)$11,119 $(11,638)$(12,429)$(12,948)$9,672 $(10,667)$(9,702)$(10,697)


Share-based Compensation
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
(In thousands)
Stock-based compensation expense charged to:
Cost of revenue$461 $148 $804 $397 
General and administrative1,011 763 2,418 1,723 
Sales and marketing912 550 1,922 1,248 
Research and development433 255 956 652 
Total stock-based compensation expense$2,817 $1,716 $6,100 $4,020 




ENERGY RECOVERY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (1)
(Unaudited)

This press release includes certain non-GAAP financial information because we plan and manage our business using such information. The following table reconciles the GAAP financial information to the non-GAAP financial information.

Quarter-to-DateYear to Date
Q2'2024Q2'2023Q2'2024Q2'2023
(In millions, except shares, per share and percentages)
Operating margin
(7.4)%(12.5)%(33.0)%(31.3)%
Share-based compensation10.4 8.3 15.5 11.8 
Executive transition costs12.3 — 9.7 — 
Adjusted operating margin
15.3 %(4.2)%(7.7)%(19.6)%
Net loss
$(0.6)$(1.7)$(8.9)$(8.0)
Share-based compensation
2.8 1.7 6.1 4.0 
Executive transition costs (2)
3.0 — 3.5 — 
Share-based compensation discrete tax item(0.1)(0.1)(0.2)(0.6)
Adjusted net income (loss)
$5.1 $(0.1)$0.5 $(4.6)
Net loss per share
$(0.01)$(0.03)$(0.16)$(0.14)
Adjustments to net loss per share (3)
0.10 0.03 0.17 0.06 
Adjusted net income (loss) per share
$0.09 $— $0.01 $(0.08)
Net loss
$(0.6)$(1.7)$(8.9)$(8.0)
Share-based compensation2.8 1.7 6.1 4.0 
Depreciation and amortization1.0 1.0 2.0 2.0 
Executive transition costs3.3 — 3.8 — 
Other income, net
(1.6)(0.7)(3.0)(1.3)
Provision for (benefit from) income taxes0.2 (0.3)(1.0)(1.4)
Adjusted EBITDA
$5.2 $0.2 $(1.0)$(4.7)
Free cash flow
Net cash provided by (used in) operating activities$8.1 $(4.1)$14.6 $4.5 
Capital expenditures(0.2)(0.6)(1.0)(0.8)
Free cash flow$7.9 $(4.7)$13.5 $3.7 
(1)Amounts may not total due to rounding.
(2)Amounts presented are net of tax.
(3)Refer to the sections “Use of Non-GAAP Financial Measures” for description of items included in adjustments.


v3.24.2
Cover Page
Jul. 31, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Jul. 31, 2024
Entity Registrant Name Energy Recovery, Inc.
Entity Incorporation, State or Country Code DE
Entity File Number 001-34112
Entity Tax Identification Number 01-0616867
Entity Address, Address Line One 1717 Doolittle Dr.
Entity Address, City or Town San Leandro
Entity Address, State or Province CA
Entity Address, Postal Zip Code 94577
City Area Code 510
Local Phone Number 483-7370
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.001 par value per share
Trading Symbol ERII
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001421517
Amendment Flag false
Energy Recovery (NASDAQ:ERII)
過去 株価チャート
から 7 2024 まで 8 2024 Energy Recoveryのチャートをもっと見るにはこちらをクリック
Energy Recovery (NASDAQ:ERII)
過去 株価チャート
から 8 2023 まで 8 2024 Energy Recoveryのチャートをもっと見るにはこちらをクリック